<PAGE>   1
                                                                   EXHIBIT 10.68

                             SUBORDINATION AGREEMENT

         This Subordination Agreement (this "Agreement") is made as of February
7, 2001, by Firstar Bank, N.A. as Trustee under the Indenture referred to below
(in such capacity, herein called the "Mortgage Holder") and TransTexas Gas
Corporation, a Delaware corporation (herein called "TransTexas") for the benefit
of Mirant Americas Energy Capital, LP, formerly named Southern Producer
Services, L.P., and TCW DR VI Investment Partnership, L.P. (herein collectively
called the "Production Payment Owners").

                                    RECITALS:

         1. The Mortgage Holder and TransTexas have entered into that certain
Indenture dated as of March 15, 2000 (herein, as from time to time amended or
supplemented, called the "Indenture"), for the equal and ratable benefit of the
holders of TransTexas's Senior Secured Notes due 2005. Pursuant to the
Indenture, TransTexas has executed and delivered certain mortgages, deeds of
trust, security agreements and financing statements (collectively, the "Security
Documents") to secure such Notes. A true and complete list of such Security
Documents which burden properties in Texas is attached as Schedule 1 hereto and
made a part hereof. Each deed of trust and mortgage listed on Schedule 1 is
herein called a "Mortgage".

         2. As described in Section 9.2 of each Mortgage, TransTexas has
heretofore executed and delivered to the Production Payment Owners that certain
Production Payment Conveyance made effective as of 9:00 a.m., Houston, Texas
time on March 1, 2000 (defined in each such Section 9.2 as the "Production
Payment Conveyance" and herein called the "Original Conveyance"), pursuant to
which TransTexas conveyed and assigned to the Production Payment Owners a
certain production payment (defined in each such Section 9.2 as the "Production
Payment" and herein called the "Original Production Payment"). As described in
Section 9.2 of each Mortgage, the Original Conveyance was given pursuant to an
Order of the United States Bankruptcy Court. As contemplated in such Court
Order, the Original Conveyance has heretofore been supplemented by a First
Supplement to Production Payment Conveyance dated as of June 7, 2000 (the "First
Supplement"), by a Second Supplement to Production Payment Conveyance dated as
of September 8, 2000 (the "Second Supplement"), and by a Third Supplement to
Production Payment Conveyance dated as of November 7, 2000 (the "Third
Supplement"), to increase the unliquidated balance of the "Primary Sum"
thereunder. The Original Conveyance, the First Supplement, the Second
Supplement, and the Third Supplement have been recorded as set forth in Schedule
1 to Exhibit A hereto.

         3. Concurrently herewith, in consideration of funds to be paid to
TransTexas, TransTexas and the Production Payment Owners are executing and
delivering that certain Fourth Supplement to Production Payment Conveyance of
even date herewith (the "Fourth Supplement") which further supplements and
amends the Original Conveyance. Prior to the effective time of the Fourth
Supplement, one of the three original owners of the Production Payment (TCW
Portfolio No. 1555 DR V Sub-Custody Partnership, L.P.) is conveying all of its
interests in the Production Payment to Mirant Americas Energy Capital, LP,
formerly named


<PAGE>   2

Southern Producer Services, L.P., one of the two remaining Production Payment
Owners, and after the effective time of the Fourth Supplement, Mirant Americas
Energy Capital, LP, formerly named Southern Producer Services, L.P., is
conveying part of its interests in the Production Payment to TCW DR VI
Investment Partnership, L.P., the other remaining Production Payment Owner. True
and correct copies of both such conveyances, and a true and correct copy of the
Fourth Supplement, are attached hereto as Exhibit A-1, Exhibit A-2 and Exhibit
A-3, respectively, and each is hereby made a part hereof. As used herein,
"Conveyance" means the Original Conveyance as amended and supplemented by the
First Supplement, the Second Supplement, the Third Supplement, the Fourth
Supplement, and such conveyances, and "Production Payment" has the meaning given
to such term in the Conveyance.

         4. Under the Indenture, the Production Payment constitutes "First Lien
Debt" secured by a "Permitted Lien" (as such terms are defined in the
Indenture). Pursuant to Section 11.2(c) of the Indenture, TransTexas has
delivered a "Subordination Request" to the Mortgage Holder, asking the Mortgage
Holder to enter into this Agreement in order to subordinate the Mortgage Holder
Liens to the Production Payment and the Conveyance (after taking the Fourth
Supplement into account), and TransTexas has satisfied the conditions in such
Section 11.2(c). (As used herein, "Mortgage Holder Liens" means all liens,
security interests, assignments (of production or otherwise) and other rights or
interests of the Mortgage Holder at any time existing on or in any properties or
assets of TransTexas which are in any way subject to the Production Payment or
the Conveyance, whether such liens, security interests, assignments and other
rights or interests arise under the Indenture or the Security Documents or by
operation of law or otherwise.)

         NOW, THEREFORE, in consideration of the foregoing, and in order to
induce the Production Payment Owners to enter into the Fourth Supplement and pay
funds to TransTexas in connection therewith, the Mortgage Holder and TransTexas
hereby agree as follows:

         Section 1. Subordination. The Production Payment and the proceeds
thereof are and hereafter shall be senior in right and priority to all Mortgage
Holder Liens, regardless of the relative priority of the Mortgage Holder Liens
and the Production Payment as determined without regard to this Agreement, and
the same shall have the same validity and effect as if the Conveyance (including
all supplements thereto) had been executed, delivered and properly recorded
prior to the date and time of execution of the Indenture and the date and time
of execution and recordation of the Security Documents. All references in
Section 9.2 of each Mortgage to the "Production Payment Conveyance" shall
hereafter refer to the Conveyance, as defined herein, and all references in
Section 9.2 of each Mortgage to the "Production Payment Conveyance" shall
henceforth refer to the Production Payment Conveyance, as defined herein. As so
modified, the terms of Section 9.2 of each Mortgage are hereby ratified and
confirmed.

         Section 2. Acknowledgment of Reliance. The parties acknowledge and
agree that Production Payment Owners have entered into the Fourth Supplement in
reliance on the priority of the Conveyance, and thus are relying on the waiver,
relinquishment and subordination set forth herein.

                                       2
<PAGE>   3

         Section 3. Governing Law. This Agreement shall be deemed a contract and
instrument made under the laws of the State of Texas and shall be construed and
enforced in accordance with and governed by the laws of such state and the laws
of the United States of America, without regard to principles of conflicts of
law.

         Section 4. Invalidity of Particular Provisions. If any term or
provision of this Agreement shall be determined to be illegal or unenforceable,
all other terms and provisions hereof shall nevertheless remain effective and
shall be enforced to the fullest extent permitted by applicable law.

         Section 5. Successors and Assigns. This Agreement shall pass to and be
fully binding upon and inure to the benefit of the successors and assigns of
each party hereto (including the Production Payment Owners).

         Section 6. Counterparts. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same instrument.

               IN WITNESS WHEREOF, this Agreement is executed by the parties
hereto on the dates set out below in their respective acknowledgments, to take
effect as of the date first above written.


MORTGAGE HOLDER:                       FIRSTAR BANK, N.A.
                                       as Trustee under the Indenture

                                       By:
                                          --------------------------------------
                                          Name: Frank P. Leslie III
                                          Title: Vice President


TRANSTEXAS:                            TRANSTEXAS GAS CORPORATION

                                       By:
                                          --------------------------------------
                                          Ed Donahue, Vice President

                                       3
<PAGE>   4


STATE OF MINNESOTA         )
                           )
COUNTY OF RAMSEY           )

         The foregoing instrument was acknowledged before me on this ____ day of
February, 2001, by Frank P. Leslie III, as Vice President of Firstar Bank, N.A.,
a national banking association, on behalf of such association in its capacity as
Trustee under the above-described Indenture.

              [SEAL]
                                       -----------------------------------------
                                       Notary Public, State of Minnesota

My commission expires:

----------------------


STATE OF TEXAS             )
                           )
COUNTY OF HARRIS           )

         The foregoing instrument was acknowledged before me on this ____ day of
February, 2001, by Ed Donahue as Vice President of TransTexas Gas Corporation, a
Delaware corporation, on behalf of such corporation.


              [SEAL]
                                       -----------------------------------------
                                       Notary Public, State of Texas

My commission expires:

----------------------

                                       4
<PAGE>   5

                                   SCHEDULE 1
                                       TO
                             SUBORDINATION AGREEMENT

                        SCHEDULE OF TEXAS RECORDING DATA

                                  COUNTERPARTS
                                     OF THE
               MORTGAGE, DEED OF TRUST, ASSIGNMENT OF PRODUCTION,
                   SECURITY AGREEMENT AND FINANCING STATEMENT,
                           DATED AS OF MARCH 15, 2000,
            FROM TRANSTEXAS GAS CORPORATION, AS MORTGAGOR AND DEBTOR,
                         TO ROBERT M. GALPERIN, TRUSTEE,
                      FOR THE BENEFIT OF FIRSTAR BANK, N.A.
      IN ITS CAPACITY AS INDENTURE TRUSTEE, AS MORTGAGEE AND SECURED PARTY,
ARE RECORDED IN THE REAL PROPERTY RECORDS IN THE COUNTIES IN THE STATE OF TEXAS
                      AS SET FORTH IN THE FOLLOWING TABLE:

<TABLE>
<CAPTION>
        COUNTY IN WHICH                                      RECORDING DATA
        COUNTERPART IS                                       (REFERENCE IS ALSO MADE TO THE "NOTE" IMMEDIATELY FOLLOWING THIS TABLE)
           RECORDED                    DATE          -------------------------------------------------------------------------------
    (EACH IN THE STATE OF               OF                                                                   REFERENCE / FILE /
            TEXAS)                  RECORDING        VOL/BK        PAGE(S)         FILM CODE NUMBER     INSTRUMENT / DOCUMENT NUMBER
    ---------------------           ---------        ------      ----------        ----------------     ----------------------------

<S>                                 <C>              <C>           <C>             <C>                  <C>
            AUSTIN                   03/16/00                                                                      001522

           BRAZORIA                  03/16/00                                                                     00010929

            CALHOUN                  03/21/00         250            86                                           0062749

           CHAMBERS                  03/17/00        00-449       190 - 303                                        1688-B

           COLORADO                  03/16/00         330         834 - 930

           GALVESTON                 03/17/00                                        ###-##-####                GAC200001259

            HARRIS                   03/21/00                                        ###-##-####                  U286247

            HIDALGO                  03/21/00                                                                      856646

           JIM HOGG                  03/20/00          17         701 - 797                                        64,586

             KENT                    03/16/00          2             129                                            180

           LIVE OAK                  03/20/00         380         407 - 505                                       00147280

          SAN JACINTO                03/16/00        00-612      5898- 5985

             STARR                   03/16/00         0858        001 - 154                                        207934
</TABLE>


<PAGE>   6

<TABLE>
<CAPTION>
        COUNTY IN WHICH                                      RECORDING DATA
        COUNTERPART IS                                       (REFERENCE IS ALSO MADE TO THE "NOTE" IMMEDIATELY FOLLOWING THIS TABLE)
           RECORDED                    DATE          -------------------------------------------------------------------------------
    (EACH IN THE STATE OF               OF                                                                   REFERENCE / FILE /
            TEXAS)                  RECORDING        VOL/BK        PAGE(S)         FILM CODE NUMBER     INSTRUMENT / DOCUMENT NUMBER
    ---------------------           ---------        ------      ----------        ----------------     ----------------------------

<S>                                 <C>              <C>           <C>             <C>                  <C>
           VAL VERDE                 03/21/00         737         336 - 423                                       0179838

             WEBB                    03/21/00         891         418 - 506                                        690351

            WHARTON                  03/20/00         361          1 - 129

            ZAPATA                   03/17/00         630          1 - 115                                         119228
</TABLE>

NOTE: A COUNTERPART OF THE DEED OF TRUST REFERENCED ABOVE, WITH A COMPLETE
EXHIBIT "A," IS RECORDED IN THE REAL PROPERTY RECORDS OF GALVESTON COUNTY,
TEXAS, AS SET FORTH IN THE FOREGOING TABLE. AS TO THE COUNTERPARTS OF THE DEED
OF TRUST REFERENCED ABOVE THAT ARE RECORDED IN THE REAL PROPERTY RECORDS OF
OTHER COUNTIES IN THE STATE OF TEXAS (AS INDICATED IN THE TABLE ABOVE), THE
EXHIBIT "A" ATTACHED TO EACH SUCH RECORDED COUNTERPART IDENTIFIES ONLY THOSE
REAL PROPERTIES LOCATED IN THE COUNTY IN THE STATE OF TEXAS IN WHICH SUCH
COUNTERPART IS RECORDED. FOR A COMPLETE LIST OF ALL REAL PROPERTIES IN ALL
COUNTIES IN THE STATE OF TEXAS THAT ARE SUBJECT TO THE DEED OF TRUST REFERENCED
ABOVE, REFER TO, AND REFERENCE IS HEREBY MADE FOR ALL PURPOSES TO, THE
COUNTERPART OF THE DEED OF TRUST REFERENCED ABOVE THAT IS RECORDED IN THE REAL
PROPERTY RECORDS OF GALVESTON COUNTY, TEXAS.

                          ADDITIONAL SECURITY DOCUMENTS

SECURITY AND PLEDGE AGREEMENT DATED AS OF MARCH 15, 2000, BY AND BETWEEN
TRANSTEXAS GAS CORPORATION, A DELAWARE CORPORATION, AS DEBTOR, AND FIRSTAR BANK,
N.A., IN ITS CAPACITY AS INDENTURE TRUSTEE FOR THE BENEFIT OF HOLDERS OF
TRANSTEXAS GAS CORPORATION'S 15% SENIOR SECURED NOTES DUE 2005.

FINANCING STATEMENT OF FORM UCC-1 FROM TRANSTEXAS GAS CORPORATION, AS DEBTOR, TO
FIRSTAR BANK, N.A., TRUSTEE, AS SECURED PARTY, FILED MARCH 27, 2000, IN THE
OFFICE OF THE SECRETARY OF STATE OF THE STATE OF TEXAS UNDER FILE NUMBER
0000460611.


<PAGE>   7


                                   EXHIBIT A-1

                                       TO

                             SUBORDINATION AGREEMENT

                  Conveyance of Interest in Production Payment


<PAGE>   8


                                   EXHIBIT A-2

                                       TO

                             SUBORDINATION AGREEMENT

                    Partial Conveyance of Production Payment


<PAGE>   9


                                   EXHIBIT A-3

                                       TO

                             SUBORDINATION AGREEMENT

               Fourth Supplement to Production Payment Conveyance